Key factors driving relatively healthy pig industry

AHDB Pork strategy director, Mick Sloyan has said that overall it has been a pretty good year for the British pig industry.

Speaking at the Pig and Poultry Fair today (May 15, 2018) he said: “After the pain of the back end of 2015 and much of 2016, the pig market recovered and average net margins (based on a full economic cost) returned to the black in 2017.

Although the market price weakened from the peak of 165p/kg (SPP) in June, average margins remain in the black into 2018. And it’s not just producers that have had a good year. Judging by press reports many of the major processors also had a profitable year.

“There are a number of key factors driving this welcome position.  Supplies, both in the UK and in the rest of Europe were relatively tight as producers reduced production following the poor profits of 2015 and 2016.

“Encouragingly, demand within the UK picked up after several months of decline. It is clear that the high profile AHDB pork TV campaign promoting fillet and loin medallions as healthy and convenient midweek meal has had a positive influence. Independent evaluation of the campaign shows that this specifically resulted in retail sales value increasing by £6.43 for every £1 spent by AHDB.

“Welcome as this is, we are clear that the objective of our marketing activity on behalf of English levy payers goes beyond short term increases in sales.  We are aiming to rejuvenate the image of pork in the minds of British consumers, who will view it as an important part of convenient, appealing and healthy meals.

“As you may know, a central feature of the campaign in January was that pork medallions are as healthy as chicken breast. This was challenged by the activist group, VIVA which I am pleased to say was rejected by the Advertising Standards Authority.   The AHDB Pork Board are currently working on the next phase of the campaign which is planned to be back on TV in September.

“In international markets, the relative weakness of sterling against the Euro and dollar in the wake of the Brexit vote continued to have a positive influence on pig prices, making imports more expensive and exports more competitive. In fact, while the rest of the EU struggled exporting to markets such as China, UK exporters managed to expand business.

“By the end of 2017 we had reached a position where the value of pork exports to China was almost twice the value of Scotch whisky exports.  If Hong Kong is included then exports to Greater China exceeded £100 million last year. Overall, exports of pork, offal, and processed products such as sausages and bacon, were worth £470 million in 2017.”

Mr Sloyan concluded by saying that the UK market is extremely competitive with about half of all pork and pork products sold being imported.

“However, the British industry has continued to trade at a premium relative to our EU competitors. This is due in large part to our reputation for producing quality assured, high welfare pork independently audited to high standards.

“The industry took an important step to enhance its reputation as a responsible producer by agreeing to ambitious antibiotic use reduction targets as part of the RUMA Targets Task Force.  It has been able to demonstrate this commitment by recording use on the eMB (electronic Medicines Book) which covered about 90% of production in 2017, encouraged by the new standard under Red Tractor.”

 

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